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When Big Banks Retreat Small Banks Rush In: Many community bankers expect to increase single-family lending in 2008, according to an American Bankers Association survey, despite industry-wide declines. Why are they so optimistic?

With many big banks cutting back mortgage lending for single-family homes, Main Street banks are looking to gain ground in their local communities by grabbing the business left on the table.

City Bank of Lynnwood, WA, has seen several larger competitors pull back on the real-estate reins in the Northwest over the past year, such as Royal Bank of Canada, First Horizon, KeyCorp and Washington Mutual, which alone closed 86 home-loan centers and laid off 3,000 workers in April.

Citys CEO Conrad Hanson considers all this retrenchment a golden opportunity for his $1.3 billion-asset bank, which has grown its real-estate lending from $478 million in 2003 to $1.1 billion in ...

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